MANY homeowners may still have to sell their homes to pay for their own care later in life, says one leading Redditch law firm.
The warning comes from FBC Manby Bowdler which says government efforts at reforms meant to tackle unfairness in the way the social care system is funded fall short of levelling the playing field.
The Church Road law firm’s Wills, Probate and Lifetime Planning team have been through the finer details of the social care reforms due to come into effect in October 2023, including the latest guidance from the Government, published on November 19, which clarify how council support affects the cap.
As a result the firm is urging people to check the small print before they decide on their own care plans as they could be left significantly out of pocket.
“The Government announced the reforms with a promise that no-one will pay more than £86,000 for their care, but this so-called ‘care cap’ is very misleading,” said Carina Kervin, Partner in FBC Manby Bowdler’s Wills, Probate and Lifetime Planning team.
“Firstly, the new guidance notes reveal that only payments people make themselves from their own funds will count towards the cap.
“This means that any means-tested council funding you receive will not go towards the maximum amount you will be expected to contribute to your care costs.
“Secondly, care is the only thing covered by the cap, and not daily living costs which go towards food, energy bills and accommodation.
“As such, all of the money you will be paying for living costs (which can add a considerable amount onto the weekly cost of your care) will not be taken into account when the Government decides how much you should be contributing to your own care, and this could eat through any savings or assets you have very quickly.”
The Government also promised that nobody needing care should be forced to sell their home to pay for it.
But Carina has warned this too isn’t as clear cut as it appears.
She says: “The reality is that if you don’t have adequate funds to pay for your care home placement (either from savings or income) and you don’t qualify for National Health Service or Local Authority funding, then your home becomes a fundamental part of the equation.
“This could mean selling your home in your lifetime to fund your care or entering into a Deferred Payment Agreement (DPA) with a local authority.”
The Government is championing the use of DPAs and says these loan agreements will be available to all.
In a DPA, the local authority agrees to pay your care costs upfront and the money for your care is recouped from the sale of your house after your death or at any time the property is sold during your lifetime – which greatly diminishes the inheritance you are leaving to your loved ones.
FBC Manby Bowdler says DPAs are subject to interest and administration fees, so advice should always be taken before entering into such an agreement.
Carina added: “While the reforms to social care funding have been largely welcomed, homeowners need to understand the implications of the rule changes on their future plans.
“Many may still have to sell their home during their lifetime to pay for their care or alternatively, their families will have to sell it in the event of their death.
“Ultimately, despite these proposed reforms, we are still likely to see a generation of people who have saved all their lives unable to leave anything significant behind for their loved ones.”
For more information call Carina Kervin on 01743 284143 or email email@example.com.